Feb. 13: Mortgage jobs; the market for servicing is spooked, which could hit mortgage pricing; is PHH Mortgage up for sale?

“Rob, my cousin asked me if there were any consumer groups that focused on homeowners. Do you know of any?” The one that jumps to mind is the America’s Homeowner Alliance, “the first ever national advocacy and member benefits alliance representing the exclusive interests of homeowners and aspiring homeowners of America.” Its slogan is, “To protect and promote sustainable homeownership for all segments of America.” Basically the goals are to ensure that homeownership remains a public policy priority, and to represent homeowners. But you can decide for yourself: https://myaha.com/


In the jobs & branches area, Nations Reliable Lending, a well-capitalized residential mortgage lender based in Houston, TX is in an aggressive growth mode. With over 300% growth over the last 18 months, it continues to seek Branch Managers to join the organization. NRL is immediately hiring branches nationwide, is currently licensed in 15 states and adding every month, is Fannie approved, and is one of the fastest growing mortgage companies in Inc 500/5000 for two consecutive years. “At NRL, you will find a company that shares the same values as you do. In an industry where there are challenges every day, they feel the key to overcoming obstacles is to remove them.  NRL does this by ensuring their branches get quick answers, have the most competitive programs, and receive excellent service with industry leading turn times.” To learn more about branch opportunities with Nations Reliable Lending, visit the link above or email joinourteam@nrlmortgage.com.


And Certified Credit Reporting, a nationwide information firm, has openings for a few qualified sales people in locales across the country. Headquartered in Ontario, California, the 29-year old firm is focused on “origination to funding, and beyond, we offer a full spectrum of products: credit, portfolio review, tax, identity, fraud, flood, AVMs, post close QC, etc. With a forward looking focus, a wide range of products to sell, and a positive, stable corporate culture, Certified Credit is well positioned for immediate and long term growth.” The ideal candidates will have extensive industry connections and a background in selling credit and related products, or, at minimum, an extensive mortgage background with a desire to learn another side of the business. If you are interested, send your resume to Kristina Block at kristina.block@certifiedcredit.com.


What’s this? A loan program with 5 percent down payment on adjustable rate mortgages fixed for the first seven or 10 years, and no mortgage insurance requirement? With all of the tough news, difficult standards to reach, layoffs, etc., there is some positive news. Guy Silas passes along news that Sandy Spring Bank, which serves the Washington/Baltimore metropolitan region as a large community bank, has just released a special offering to support local civil servants. It is an example of what local and community banks should be doing: http://www.bizjournals.com/washington/blog/2014/02/sandy-spring-bank-offers-civil-service.html.


There is more information on the changes at Digital Risk, and management sent out a note saying, “The action we took yesterday was based on industry wide reductions in default related activity. We simply are changing our workforce model from fixed to variable. Unfortunately, this change requires a regulatory filing (of course) and the media is taking their facts from the regulatory filing which is a legal document and does not describe what is actually occurring.” A link to the HousingWire story explains it in more depth: http://www.housingwire.com/articles/28934-mortgage-analytics-firm-digital-risk-moves-to-hybrid-workforce. Glad to hear!


Uh-oh. Once again, a New York regulator is influencing the entire mortgage industry. In this case, the industry is still talking about the Ocwen/Wells Fargo servicing deal that fell through last week, and with good reason. Benjamin Lawsky, superintendent of New York’s Department of Financial Services, believes that the non-bank financial sector has grown too much, too fast, with few capital requirements in place. He may have a point, but this could easily freeze the market for servicing, and if that (the demand for the servicing asset) happens, prices will drop, and rates to consumers will increase. Read all about it: http://www.reuters.com/article/2014/02/12/mortgages-newyork-idUSL2N0LH18O20140212.


A report from the CFPB on January 30th says that mortgage servicing issues remain a top concern for the agency. The CFPB’s supervisory work completed between July and October 2013 uncovered the same sort of mortgage servicing problems that occurred in 2009 and 2010, as banks were overwhelmed with record numbers of home foreclosures. The report claims servicers violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s ban on unfair, abusive or deceptive acts and practices in a handful of areas, such as payment processing, the transfer of servicing rights and providing borrower information to consumer credit reporting bureaus. Examiners found that two servicers engaged in unfair practices by failing to honor existing permanent or trial loan modifications after a servicing transfer, which resulted in borrowers being charged the wrong amount or being told to pay the wrong amount. Agency examiners also found that two servicers were requiring borrowers to waive any existing claims in order to get a forbearance or loan modification agreement. The examiners found these broad waiver clauses to be unfair as they were done without regard to individual circumstances. The end result of the agencies efforts and due diligence have been fines and penalties levied against the institutions it oversees; according to the CFPB consumers have received $2.6 million as result. Mortgage Servicing Problems?


Is two years a long time nowadays? Maybe I’m not the most qualified to judge, considering I can’t even remember what I received for Christmas 40 days ago. Thanks to Barbara Mishkin of Ballard Spahr for including, and commenting, on a pretty good Washington Post article regarding the history of the CFPB. The story reads more like an episode of “Days of Our Lives” than it does an hour watching C-SPAN. I guess that will happen when pools of talented labor are drawn from the private and public sector, and meet in a sort of micro-meets-macro government Thunderdome type scenario. The article is good, taking the reader from concept (who had the idea?) to implementation; through confirmation of the current Director; to employee turnover (yes, there has been substantial turnover in two years). For an agency not-yet up to flank speed, the challenges and expectations have never been greater. Ultimately, the CFPB has to the address the issue of being a federal bureaucracy, all the while trying to clean up a federal bureaucracy: Ballard Spahr blog. And Washington Post.


Let’s check on some lender & investor updates from recent weeks.


First, broadly speaking, are underwriting guidelines becoming more lenient, or less? I guess it depends on how big your company is: http://www.mortgagebankers.org/NewsandMedia/PressCenter/87076.htm.


Total Mortgage Services, LLC announced it hired Andy Pettola as a new Executive Vice President to lead its wholesale lending division Total Mortgage Wholesale. I don’t usually mention individual moves in the industry, as there are too many, but this is interesting because “Immediately joining Mr. Pettola at Total Mortgage Wholesale is a team of nine account executives, all from MSI, that were responsible for over $1 billion in loan production in 2013.”


The latest earnings release from PHH (which is mostly closed today due to the storm) seems to sum up the state of mortgage bankers everywhere. Pre-tax mortgage banking income fell to a loss of $45 million from a loss of $22 million in 3Q, below forecasts, due to higher expenses. Interest rate lock commitments fell 27% Q/Q to $2.1 billion from $2.9 billion, lower than expected. Total closings were down at $9.5 billion from $14.8 billion in the prior quarter but above estimates. Gain on sale margin was 3.84%, up from 3.74% in 3Q.


Speaking of PHH, is the mortgage company “on the block”? Perhaps: http://www.bizjournals.com/buffalo/news/2014/02/13/phh-mortgage-parent-ready-to-sell.html.


There’s been much discussion on the topic of EPO recourse.  Surprisingly, not all investors have such language in their loan purchase agreements. First Mortgage Corporation, headquartered in Ontario, CA, is an example. With minimal overlays to FHA & VA guides, FMC specializes in lending to the low-to-moderate income borrower through its retail, wholesale and correspondent channels. FMC also offers a unique down payment assistance program with maximum financing down to 580 credit score and CLTV of 99.5%. (The DPA program is available in AZ, CA, NM, NV, TX & UT.) “With a very low seriously delinquent rate of 3.39%, FMC’s exceptional servicing department helps correspondents reduce the incidence of early payment default.” Correspondents interested in learning more about the program should contact Sharon Magnuson at correspondent@firstmortgage.com.


Fannie Mae has updated Desktop Underwriter to align with the VA 2014 county loan limit changes, which went into effect for all casefiles submitted or re-submitted after January 18th.

As of April 1st, Fannie will require servicers to send a notification to borrowers with mortgage loan modifications with a step interest rate adjustment that includes the amount and effective date of the increase; the amount and due date of the new monthly payment; an explanation of how the interest rate cap was set and how it will be fixed once it reaches the interest rate cap; a payment schedule table; an explanation that the monthly payment includes an escrow for property taxes, hazard insurance, and other escrowed expenses which, if changed, will change the monthly payment; an explanation of how the new monthly payment was determined, servicer contact information and instructions to contact the servicer with any questions; the Homeowner’s HOPE Hotline number and instructions to ask for Making Home Affordable help; an explanation that the borrower can seek assistance with household budgeting from HUD-approved housing counseling agencies; and information on additional educational resources at Fannie’s Know Your Options website.


Fannie will be implementing version 2.4 of EarlyCheck over the weekend of April 14th, adding approximately 175 new loan-level edits for the .xml file format and 35 new edits for the 1003 and MISMO AUS .3.1 origination file formats.  The release will also include 55 4dit message text changes, five edit severity changes, one input file type change, and 50 edit deactivations, all of which are designed to more closely align EarlyCheck with Loan Delivery, support ATR and QM, and support the changes made to DU 9.1.


United Guaranty is introducing a new first lien mortgage insurance master policy that strengthens customer relationships with a first-in-the-industry Policy Commitment Letter—specific to each lender—that clearly defines each party’s roles and responsibilities, adding certainty and flexibility.


United Guaranty’s master policy has been approved by Fannie Mae and Freddie Mac and has been filed in all 50 states and the District of Columbia. The Policy Commitment Letter—along with new Claims and Appeals guides—clearly spells out policies and practices governing underwriting, claims, and appeals. Future updates will be sent to the lender and automatically be merged into the Policy Commitment Letter to provide an enduring written record. The Policy Commitment Letter also provides additional flexibility to enable a lender and United Guaranty to agree to reflect operational changes—and provides an easy-to-reference, automatically updated record of those agreements. All lenders are required to sign and execute the Policy Commitment Letter to insure loans on or after the July 1, 2014, effective date of the new master policy. When the new master policy becomes effective, the existing one will be canceled, and all new applications for insurance submitted to United Guaranty will be governed by the new master policy and Policy Commitment Letter, which do not affect loans that are insured under the current master policy.


As part of Ginnie Mae’s modernization efforts, issuers are now required to access the Ginnie Mae Enterprise Portal in order to request Commitment Authority, for which they must authorize their selected bank to accept ACH debits from BNY Mellon for the commitment fees.  Lenders are also able to submit master agreements, requests for pool numbers, and requests for commitment authority directly through the GMEP and must upload their master agreements by March 31st.


Per the January 10th rules, Wells Fargo is requiring that all submitted loan package include evidence of how the DTI was determined.  In recent weeks, DTI Review has recorded an influx of loan files where the documentation does not support the calculated debt, the credit inquiry letter is not complete, and debt and/or income documentation is missing, resulting in suspense conditions.  Lenders are encouraged to use the Income and Debt worksheet; however, alternative forms will be accepted provided they reflect all monthly income types for each borrower, how the monthly income was determined, the total qualifying income, the primary residence PTI, the front and back end DTI ratios, the total monthly debt from the final AUS/credit report/1003, any additional debts not listed on the credit report, an explanation for debts not included in the DTI, and a list of all documentation used to support how the underwriter derived the total income and assets.


Do you really want to hear about rates? New York could be very quiet with the approaching storm – are folks hoping for a 5 day weekend? The 10-yr had a 2.76% close Wednesday after a 2.74% open, and this morning is at 2.74% – so we may see a small improvement in rate sheets today. We’ve had Retail Sales (-.4%, ex-auto unchanged) and Jobless Claims (up 8k to 339k from 331k, in line with expectations). The Treasury concludes its quarterly refunding with $16 billion in 30-year bonds auctioned at 1PM EST.



If you have a spare 7-8 minutes on this winter day in mid-month, this is very interesting. “The Top 10 Craziest Moments Caught on Live TV”: https://www.youtube.com/watch?v=yLVSN9Q3toc.



(Copyright 2014 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Rob Chrisman